Third-party negotiators, or 3PNs, help shippers reduce shipping costs through negotiations with carriers. 3PNs have proven successful, generating up to 49% cost improvements. Their use is growing both due to their track record and the current economic conditions, as shippers seek to cut expenses. 3PNs allow shippers to focus on their core work while experts manage negotiations and measure savings, providing additional capital during difficult economic times. Selecting the right 3PN partner requires vetting their approach and checking references.

1. A Smart
Decision in Any Economy
Third-party negotiators help
shippers improve profitability
— By Keith Byrd —
Third-party negotiators, or 3PNs, are on the rise, and this growth is a function
of their proven ability to generate strong results as well as the current economic
condition; both factors are driving companies to actively seek expert negotia-
tors to reduce their small package spend.
The PARCEL Best Practices Survey results found that companies using a
third-party consultant to negotiate their small package agreements realized up
to a 49% improvement in discounts, compared to those not using a consultant.
This finding legitimized the use of 3PNs and demonstrated to carriers and ship-
pers alike that 3PNs play a valuable role.
3PN Growth in a Challenging Economy
Shippers are starting to acknowledge that 3PNs are an effective solution for
shipping cost reduction; however, these trying economic times are arguably
playing a bigger role in the growth seen with 3PNs. Currently, companies are
desperately attempting to increase profitability. The most basic business fun-
damental, aside from supply and demand, holds that there are only two ways to
improve profitability: The first way is to increase revenue, and the second is to
reduce expenses. In difficult economic times, increasing revenue can be nearly
impossible, so shippers are focusing on reducing expenses. With the under-
standing that 3PNs have a proven track record of shipping expense reduction,
getting them involved is a no-brainer for many shippers.
The current economic conditions are also relevant as many companies are
running lean after layoffs and therefore need a third party to manage the pro-
cess. A good 3PN should be able to manage the entire process and monitor the
results after the negotiation with very little work on the part of the shipper. To
many, this is critical as it allows employees to stay focused on their work while
having peace of mind that professionals are managing the negotiation process
and accurately measuring realized savings. A good 3PN should also be able to
find areas for process improvement if the shipper desires this service.
The impact of the savings realized from bringing in a 3PN is amplified by
the slowed economic conditions. Many shippers are using these savings to
protect jobs, increase market share, improve the bottom line and, in some
cases, stay afloat. In down times, additional capital is a boon as the value
of each dollar is comparatively greater. For example, if a company is com-
mitted to growing market share in a tough economy, it can often market and
28 OCTOBER 2009 | www.PARCELindustry.com

2. advertise to its customers at reduced rates. The impact of this relationship, it is important to find a partner that is a good fit.
is compounded when competitors often simultaneously lower There is a wide range of 3PN styles; some negotiate on-site,
their marketing budgets to reduce their costs. No matter what some do the negotiations remotely, some are larger companies,
a company’s goals or objectives, the infusion of savings in the and some are smaller. For a shipper, the best approach is to ask
form of reduced rates enables shippers using third parties to be questions, find out how the 3PN manages the negotiation, call
more successful in this economy. its clients to verify past performance and, above all else, find
Despite the success of 3PNs and the increased need for their someone you can trust. The best way to hire a 3PN, like hiring
services due to challenging economic times, there are many anyone else, is to interview them and check their references.
obstacles standing in the way of their growth. One of the biggest Once you have found a 3PN you are interested in partnering
obstacles is the carrier. Carriers can lead shippers to believe that with, have them provide your company with a free analysis of
3PNs do not add value and that their services will just be an the savings they can produce considering your shipping charac-
added expense. Clearly, this is not the case, but sometimes it is a teristics. In most cases, the process will only require you sub-
difficult obstacle to overcome, especially when an attentive car- mitting some of your recent carrier invoices for their review. At
rier representative is involved. Many customers are also worried this point, a good 3PN should be able to provide an accurate
about damaging their relationship with their carrier representa- estimate of the amount you can expect to save. A good question
tive by bringing in a third party. This is an important concern, to ask a 3PN’s clients is how close the initial estimate was to
and good carrier representation is a strong asset. However, in the realized savings; this should tell you a lot about what you
most negotiations, the carrier representative is far more attentive can expect. n
to the shippers’ needs post-negotiation.
Selecting a 3PN Keith Byrd is the co-founder of Transportation Impact LLC., a growing 3PN
Many shippers are not sure how to approach 3PNs or how focused on carrier rate reduction and process improvement. He can be con-
to determine which one is right for them. Like any business tacted at kbyrd@transportationimpact.com or 252-646-3245.
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CONNECTED?
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for you! Join PARCEL’s LinkedIn group, and you’ll be able to connect with your peers, start
discussions with your colleagues (and invite others to join in) and more! Simply go to PARCEL’s webpage
(www.PARCELindustry.com) and click on the LinkedIn icon. It’s as simple as that!
OCTOBER 2009 | www.PARCELindustry.com 29